Europe needs both Russian and Azerbaijani gas

Europe needs both Russian and Azerbaijani gas

After arriving to the opening of the FIFA World Cup, President of Azerbaijan Ilham Aliyev met with Vladimir Putin and briefly discussed prospects for cooperation between two countries. Putin promised that a detailed discussion will be held on August 30, during Aliyev's official visit to Moscow, noting that relations are developing extremely successfully - trade volume grew by 34.4% over the past year, and by 19% in the first quarter of this year. Ilham Aliyev, in turn, spoke about specific results of the North-South project implementation, the growth of cargo flow from Russia through Azerbaijan, and about plans to expand economic cooperation.

The fact that Presidents of Russia and Azerbaijan spoke about economic cooperation just a day before such a huge event also shows that there are practically no problems in bilateral relations, and talks about unhealthy competition in the energy markets are groundless.

Rumors about rivalry between Moscow and Baku were spread on May 29, after opening ceremony of the Southern Gas Corridor (SGC) - gas pipeline that will supply natural gas to Europe - was held in the Azerbaijani capital. SGC consists of four major projects: development of the Shahdeniz-2 field with reserves of 1.2 trillion cubic meters of gas; the South Caucasus Pipeline, as well as TANAP and TAP projects. Three of these four projects have already been completely implemented, and the TAP has been implemented by 72%

Azerbaijan's confirmed gas reserves are 2.6 trillion cubic meters, and the largest infrastructure project in Europe - the SGC - will allow Baku to supply gas resources to the markets of Turkey and Europe.

Azerbaijan view the SGC as a project that will strengthen its energy security and, as a result, national security, as well as create a new format of cooperation in Eurasia.

It should be remembered that contract on the Shahdeniz gas field, which has become main resource base of the SGC, was signed back in early June of 1996. Since then, Azerbaijan was able to position itself not only as an oil exporting country, but also as a gas exporting country, although the development of gas fields wasn't that interesting at that time, since profit was lower compared to oil fields. That's why it was pretty hard to attract investors to this project two decades ago.

Nevertheless, the Baku-Tbilisi-Erzurum gas pipeline was commissioned in 2007, and the development of the Shahdeniz field would be impossible without it. That year Azerbaijani gas was transported to Georgia and Turkey for the first time. In 2012, Azerbaijan and Turkey signed a contract on the TANAP construction. Foundation of the SGC was laid on September 20, 2014. Implementation of this giant infrastructure project received huge investments (over $40 billion).

The SGC is a technically and economically difficult project, which requires extensive international cooperation. Seven countries participate in this project: Azerbaijan, Georgia, Turkey, Bulgaria, Greece, Albania, Italy. Bosnia and Herzegovina, Croatia and Montenegro are planning to join the project at its next stage.

"Azerbaijani gas is a new source, and the Southern Gas Corridor is a new energy artery, a project that reimagines the energy map of Europe... All participating countries and companies will get huge profits - both political and economic," Ilham Aliyev said.

As for Russia, the SGC creates conditions for healthy market competition in the European gas market. According to the Analytical Center under the Russian Government, last year Russia produced 690.9 billion cubic meters of gas, exceeding the amount produced in 2016 by 8.1%. This was a record figure for the entire post-Soviet period, and Russia is currently the biggest exporter of natural gas in cubic meters, ahead of countries like Qatar and Norway.

Last year profit from gas supplies, including the liquefied natural gas (LNG), raised by almost 22% compared to previous year, and amounted to 42.9 billion dollars. Some experts believe that during expansion and reorientation of gas export routes, Russia will implement several LNG projects, and will work on the eastern vector, including the Eastern Gas Program and the Siberia Power pipeline.

 

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